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After many high-profile soccer clubs suddenly dissolved, leaving fans and players in dismay, officials and experts say a new financial playbook is needed so clubs can support themselves without relying on corporate backers

By Zhou Qunfeng , Yang Zhijie and Xie Ying Updated Oct.1

Players from Jiangsu Football Club, sponsored by retail giant Suning, celebrate their first Chinese Super League championship title, November 2020

Yang Xiaotian, a star defender for top-flight Chinese soccer team Jiangsu Football Club, did not believe his team had actually disbanded until the Chinese Football Association (CFA) published the list of the teams for the 2021 season of the Chinese Super League (CSL).  

China’s soccer culture and teams have been roiled by a series of scandals, with clubs dissolving amid accusations of owners and investors abandoning clubs after a frenzy of spending on expensive overseas players and clubs, while seeing few returns on their investment. It comes amid tightening government regulation intended to reign in the excesses, including requiring teams to remove the name of their principal sponsor from the club name, which forced clubs to suddenly rebrand at the end of last season.  

Jiangsu, formerly known as Jiangsu Suning FC, nabbed the CSL title for the first time in 2020 and was considered a powerhouse in the domestic game. Based in Nanjing, capital of Jiangsu Province, the club was sponsored by locally based retail giant Suning.  

In a statement released at the end of February, players were given notice that “Due to various uncontrollable elements, Jiangsu Football Club cannot effectively guarantee to continue to play in the CSL and the AFC [Asian Football Confederation],” reported Titan Sports Weekly, a newspaper based in Changsha, Hunan Province. The decision affected other affiliated teams, including Jiangsu’s youth teams and Jiangsu FC’s successful women’s team, which had won the Chinese Women’s Super League title in 2019.  

It was just months since the men’s team had won the CSL championship in November 2020, which entitled them to a place in the AFC. In existence for 27 years, the club was bought by Suning Appliance Group in December 2015 for 523 million yuan (US$76.9). Rumors that Suning, also a majority owner of Italian Serie A team Inter Milan, was in financial trouble and looking to offload noncore businesses had been spreading for months. Yet players like Yang, who now plays for Guangzhou City FC, had hoped another investor would step in.  

The top-tier of Chinese soccer is divided into four national leagues, with lower regional leagues. Below the top-tier CSL are the first division CFA China League, the CFA Division Two League and the third -tier Chinese Football Association Member Association Champions League. Jiangsu FC is not the only club to abruptly quit the CFA, with five more clubs at lower national league levels announcing their withdrawal, three from the China League and two more from the third league. In 2020, 16 clubs quit the national leagues, including second-division Liaoning Football Club, which had been in existence since 1953 and had provided several big-name players for the China national football team.  

The CFA said that 11 of the 16 clubs were disqualified because they were in wage arrears for players and staff, including Liaoning FC, and the other five chose to drop out due to financial reasons.  

Sports observers have long warned that investment in Chinese soccer was unsustainable after investors lavished enormous sums on buying clubs and players, as well as employing overseas coaches for huge salaries. Despite 27 years of professional play, Chinese men’s soccer saw its world FIFA ranking fall from 40 in 1994 to 77, one place behind the Caribbean island of Curacao which has a population of 160,000.  

“Soccer is heavily profit-driven in China and nobody knows why men’s soccer has been at such a low level for years, nor have they found the right direction to develop [the game],” Zhang Lu, deputy director of CFA’s strategic planning commission, told NewsChina.  

Fever Pitch 
Yang Xiaotian told NewsChina how excited he was when Suning bought Jiangsu FC. “We plan to win the CSL championship within three years and the AFC championship within five years,” Zhang Jindong, billionaire entrepreneur and major shareholder in Suning, told media after the deal.  

Zhang followed up his claims with big investments. In February 2016, Suning spent 50 million euros (US$61m) on Brazilian player Alex Teixeira, breaking the transfer fee record for China in what was then a buying frenzy. Teixeira’s deal was the third time the record was broken in 10 days. Soon after, Suning splashed out 28 million euros (US$34.1m) on another Brazilian, Ramires Nascimento.  

According to German website transfermarkt.com, in 2016, the CSL’s 16 teams spent a combined 300 million euros (US$366m). Jiangsu FC’s share of the buying spree was the biggest, with total transfer fees exceeding 100 million euros (US$122m) that year.  

Suning also spent eight months building a training center. Opened in 2017, it consisted of two standard natural grass soccer pitches and a seven-player pitch covered with Bermuda grass used in international competitions. A former employee of Jiangsu FC told NewsChina on condition of anonymity that Suning had sunk at least 5 billion yuan (US$735.5m) into the club over the past five years.  

Media dubbed this period of bottomless-pocket purchases the “jinyuan” soccer craze – meaning pricey or moneyball. It began in 2011 when Guangzhou Football Club, then known as Guangzhou Evergrande FC after its owner Evergrande Group, China’s secondlargest property developer, was promoted to the CSL. Well known as a big spender, Evergrande, which bought the club in 2010, pumped up spending on domestic and overseas players and coaches. Guangzhou FC did garner an impressive slate of titles, including eight CSL championships, two AFC championships, two CFA Cup championships and four CFA Super Cup championships. Their success lured other clubs to follow the investment craze.  

Data from transfermarkt.com showed that in 2017, 11 of the 16 CSL teams saw their total value exceed 10 million euros (US$12.2m), with that of Shanghai Port FC (previously known as Shanghai SIPG after owners Shanghai International Port Group) rising to 76 million euros (US$92.7), the highest among all Asian professional soccer teams. The website revealed that Shanghai Port spent 60 million euros (US$73.2m) importing Brazil player Oscar Júnior that year, nearly double the value appraised by the website.  

These costly players created a bloated payroll. Argentine soccer star Carlos Tévez joined cross-town rival Shanghai Shenhua Football Club in 2016 with an annual post-tax salary of 38 million euros (US$46.4m), even higher than global soccer stars Lionel Messi and Cristiano Ronaldo. 
A report in the Shanghai-based Oriental Sports Daily revealed that in 2019, the annual salaries of CSL players totaled 4.8 billion yuan (US$705.8m), 10 million yuan (US$1.5m) per player on average, even higher than that of many English Premier League teams.  

“The jinyuan soccer craze took players’ salaries away from their true value and encouraged them to get lazy,” Ma Dexing, associate editorin-chief of Titan Sports Weekly, told NewsChina. “They earned money too easily and even bench-warmers could earn 4-5 million yuan... It made them unwilling to improve themselves,” he added.  

To curb the trend, the CFA in March 2018 released a document to cap annual monetary input into professional soccer clubs, including regulating player salaries. The latest update in late 2020 capped investment per CSL club at 900 million yuan (US$132.4m), club players’ annual salaries to 10 million yuan (US$1.5m) before tax and national team players at 12 million yuan (US$1.8m). Soccer stars that signed contracts before the new rules were grandfathered in, including Oscar of Shanghai SIPG, who earns US$25 million, Forbes reported.  

Lacking a Long Game
Clubs welcomed the policy, as exorbitant costs had dragged them into financial crisis. Like clubs in other countries, Chinese soccer clubs earn money mainly from ticket sales, broadcast rights, licensing and merchandise sales. Due to its relatively lower-killed local talent pool, men’s football in China has a narrower audience base than England’s Premier League, the most-watched soccer league in the world, so these sources of income do little to cover the clubs’ already sky-high costs. While soccer is very popular in China, many fans prefer the European or South American leagues.  

At a conference on the financial management of professional soccer clubs in Shanghai at the end of 2018, an official from the Asian Football Confederation (AFC) warned that the CSL clubs had suffered growing losses between 2015 and 2017. In 2017, losses soared to US$700 million, an average of 40 million per club.  

The annual fiscal report of Shanghai International Port Group showed that its affiliated club Shanghai Port saw losses of 370 million yuan (US$54.4) in 2017. The same year, media revealed that Guangzhou FC, with its overseas-heavy roster, posted losses of 987 million yuan (US$145.1m), nearly 100 million (US$14.7m) more than in 2016.  

Suning was in a similar predicament – its spending in the winter transfer window of 2017 dropped to 12.9 million euros (US$15.7m), eighth among all CSL clubs. Its transfer spending dropped to 2.3 million euros (US$0.3m) in 2019.  

On March 20, nine Jiangsu FC players filed suit at the local labor arbitration bureau, claiming that the club did not pay their promised bonus in 2020 and compensation that was due after the club dissolved. According to Xu Xudong, the players’ attorney, some players have reached a modest settlement with Jiangsu FC. However, other former club players and long-time staff have yet to reach an agreement, and compensation is expected to reach high sums. 
Chinese media reports indicate that wage arrears have become a frequent problem at professional clubs. In February, former players of Inner Mongolia Zhongyou Football Club complained in a post on Sina Weibo that the club had failed to pay them for eight months and they alleged that senior management embezzled money and abandoned the club. The club was disqualified from the second tier this year. In the 2020 season, China League One Zibo Cuju Football Club was involved in a scandal over failure to pay wages. The dispute only ended in April when the club was taken over by new chairman He Shihua and the wage arrears were paid with the help of the local government. According to the CFA, wage arrears were the reason why 11 of the 16 were disqualified from the national leagues in 2020.  

Fans hold a giant banner that reads “go with the motherland” at a match between Chongqing Football Club and Jiangsu Football Club, September 2019

Cultural Goals 
After dissolving, Jiangsu FC’s first-string players were left scrambling to find a new club. But others, including 150 youth and reserve team players, were left in limbo.  

According to Liu Jue, a long-time Jiangsu FC fan, the team’s unexpected suspension has exposed a deep problem – soccer teams, which are part of a city’s spirit and culture, are controlled by a sole enterprise. Tianjin Jinmen Tiger Football Club (formerly Tianjin Teda), which was also threatened with disqualification from the CSL after a winless 2020 season, managed to meet the CFA’s criteria in time for the 2021 league. A fan of the Tianjin Jinmen Tiger FC wrote anonymously in Titan Sports Weekly that the team carried several generations of people’s memories and Tianjin fans regarded the team as an iconic part of the city. Tianjin’s other team, Tianjin Tianhai FC, went bankrupt and folded in May 2020. The club, which had several highprofile foreign players and coaches, was saddled with debt amid a scandal involving the owner Shu Yuhui of Quanjian Group, a herbal medicine company, who was jailed for nine years in January 2020 for involvement in a Ponzi scheme, media reported.  

Hou Zhiqiang, the former coach of Zibo Cuju FC, told NewsChina that he successfully led his team in the promotion race from the third tier to the CFA China League in 2020, even though the local government was forced to assume control of the team. However, the club’s new investor Hu Shihua dismissed him and several other contracted players, telling them that they would set up a brand-new team.  

“The spirit and culture we accumulated over three years and passed to our fans will die with the dismissal of the old team. The new investor may have [financially] rescued the club but they lost something intangible, which hurts fans and the city,” he said.  

According to Ma Dexing, the big change in why entrepreneurs wanted to invest in Chinese soccer came in 2002 when the Chinese men’s national team first qualified for the World Cup finals. “Before then, most owners were fans and they invested in their clubs out of passion and enthusiasm,” he told NewsChina, “The newer bosses had no interest in soccer and just regarded the clubs as a tool to promote themselves and advertise their businesses... They almost never watch matches,” he added.  

An official from a municipal soccer association who refused to reveal his name agreed with Ma’s assessment. “Many investors don’t understand soccer at all, but are eager to make quick money... Their hopes that a club could rise to the top level within two or three years goes against the principles of soccer development,” he told NewsChina. “Too many clubs burned through cash in these years and they disrupted the market.”  

In October 2015, media reports said that the CSL sold its broadcasting rights for the next five years for 8 billion yuan (US$1.25b), a positive sign for the development of Chinese professional soccer. However, a report by China News Service (CNS) cast doubt on whether club owners would benefit from the deal. “While ‘burning cash’ dominates the sport, soccer culture remains very weak in China,” the report said. The report went on to cite the loyal fanbase of the English Premier League as its inherent success. In pre-Covid years, the Premier League attracted on average 38000 in-stadium fans to each of its 380 games in a season. Internationally, it is the most watched football league in the world, broadcast to 212 territories. It can be concluded that China similarly needs to build its own local football culture to develop a market of loyal fans.  

Fans or Finances 
To prevent more clubs from disbanding as easily as Jiangsu FC, the CFA wants to diversify its club shareholder structures. In an interview with China Central Television (CCTV) anchor Bai Yansong, CFA president Chen Xuyuan said that soccer is a social good and investors should be more aware of their social responsibility. His comments triggered heated debate.  

Opponents have attributed the dissolution of so many clubs to the CFA’s ban on including the leading sponsor or owner in the club name, which came into effect in December 2020. The “neutral name” edict, observers said, had weakened the clubs’ brands and decreased investor desire to invest in soccer, especially amid the Covid-19 pandemic. Fans were also upset, media reported, with many saying the clubs had their name for decades, and that they had an emotional attachment to the team under that name.  

Chen argued with Bai that the neutral name reform has been under consideration for six years and that having their name in a team’s title is not a leading source of an investor’s profit. 
Ma agrees. He favors the idea that pro soccer investors, no matter private or State-owned, should care about public benefits. “Over the past three decades since soccer went professional, the CFA has rolled out loads of reforms, such as neutral names and salary caps, but few clubs truly heeded them,” he said, adding that the clubs were just using the reforms as an excuse to shirk responsibility for their players, staff and fans after a club dissolves.  

Zhang Lu told NewsChina that Japan has implemented similar reforms of soccer clubs to prevent them from becoming private property of an enterprise and it has been effective. He said he supports the neutral name reform in China, but suggested officials make detailed plans on how to implement it.  

“Investors have to consider both the public benefits and the commercial viability of the soccer industry, since the latter will increase an enterprise’s popularity and promote its development,” he said. “While emphasizing the public benefits, we should guarantee the interests of investors as well. I proposed giving tax incentives to soccer investors in 2010, but the suggestion was not taken up for whatever reason,” he said.  

Li Baqiao, a journalist at Soccer Night, a soccer magazine produced by CCTV, agreed. “At a time when soccer culture in China isn’t mature and few people are fully aware of the public benefits of the industry, we can’t demand any investor to consider only passion and enthusiasm while disregarding whether their enterprises would go bankrupt,” he told NewsChina. “Truth be told, public benefits do not mean no profit. For example, welfare lotteries and sports lotteries are both for the public good and profit, while with soccer, people have not yet reached a consensus about how to lawfully profit from it while realizing its public benefits,” he added.  

“As China has not yet found how to develop professional soccer with Chinese characteristics, it’s normal to make mistakes during the reforms,” Ma said. “We have to systematically sort out the problems and sum up our experience... We have to allow the mistakes, since they are definitely better than doing nothing.” 

A woman holds the Chinese Super League championship trophy during the opening ceremony of the 2021 season at a stadium in Guangzhou, Guangdong Province, April 20, 2021